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Weekly Downgrade Wrap-Up

As usual, we have a week’s worth of downgrades on the debt of private equity-backed companies from Standard and Poor’s and Moody’s. (Reminder: We’d call it an upgrade wrap-up if the ratings agencies ever issued on. In eight weeks of doing this column, we’ve seen one.)

This week there are eight, including an unsolicited rating, which we welcome as a step in the right direction for the previously “censored” ratings agencies. Besides, as we pointed out last week, too many companies are asking the agencies to withdraw their ratings just because they don’t like getting downgraded.

Bain Capital and GS Capital were this week’s repeat offenders.

Company: Harman International Industries
Sponsor: GS Capital and KKR
Downgrade: Moody’s lowered the comapany’s corporate family and probability of default ratings to B1 from Ba2.
Highlights: “The B1 Corporate Family Rating reflects further expected deterioration of Harman’s operating performance and resulting credit metrics over the intermediate term from the significant reductions in demand for the company’s products.”

Company: MacDermid Incorporated
Sponsor: Court Square Capital Partners
Downgrade: Moody’s lowered the company’s corporate family rating to B3 from B2.
Highlights: “The change in ratings follows weak operating performance, concerns that continued weakness in its end markets could result in the company under performing its 2009 budget and an expected decline in liquidity.”

Company: Bain Capital
Sponsor: Bombardier Recreational Products Inc.
Downgrade: Moody’s lowered the corporate family and probability of default ratings to Caa1 from B3.
Highlights: “Moody’s expects that BRP’s adjusted leverage may now remain above 6x through much of the next year.”

Company: Ply Gem Industries
Sponsor: CI Capital Partners
Rating Assignment: S&P assigned its ‘CCC’ corporate credit rating on an unsolicited basis.
Highlights: “We are concerned that the company could seek a restructuring of its debt obligations in order to reduce its high debt leverage and interest burden over the near term.”

Company: Broder Bros.
Sponsor: Bain Capital
Downgrade: S&P downgraded the company to ‘CCC’  from ‘CC’ on Tuesday. On Thursday, the ratings agency assigned Broder Bros. an ‘SD’ rating.
Highlights: “The downgrades follow Broder’s announcement that it elected not to make its April 15th $12.7 million interest payment on the senior notes. On April 9, 2009, the company announced that it was pursuing an exchange offer for its 11.25% senior notes. In addition, it also received an amendment and waiver on its $225 million asset-based revolver, waiving any default arising from the delay in delivering the company’s 2008 audited financial statements and delaying the interest payment until May 15, 2009.”

Company: Six Flags
Sponsor: Generation Partners
Downgrade: S&P lowered the company’s corporate credit rating to ‘D’ from ‘CCC’.
Highlights: “The rating actions stem from the company’s announcement that it did not make the April 15, 2009, $7 million interest payment on the 9¾% senior notes.” The company has a 30-day grace period to make the payment or negotiate an amendment. The company could file for Chapter 11 or seek-out-of-court bankruptcy, S&P reported.

Company: Harrah’s Entertainment
Sponsor: TPG and Apollo Management
Downgrade: S&P lowered the company’s corporate credit rating to ‘SD’ from ‘CC’.
Highlights: These rating actions follow the settlement of the company’s below-par debt tender offer. S&P expects to raise its corporate credit rating to ‘CCC’ with a negative outlook, it said.

Company: Hawker Beechcraft Inc.
Sponsor: GS Capital
Downgrade: S&P lowered the company’s corporate credit rating to ‘B-‘ from ‘B+’.
Highlights: “The corporate credit rating on Hawker Beechcraft reflects high debt leverage, modest profitability with poor credit protection measures, large working capital swings, and risks associated with the current market downturn.”

Previous Weeks:

Weekly Downgrade Report 8
Weekly Downgrade Report 7
Weekly Downgrade Report 6
Weekly Downgrade Report 5
Weekly Downgrade Report 4
Weekly Downgrade Report 3
Weekly Downgrade Report 2
Weekly Downgrade Report 1